The Impact of the 'Assembler Strategy' in the Enterprise Applications Field




Genesis of Infor Process Group

In evaluating recent acquisitions in the enterprise resource planning (ERP) field, it will be useful to describe Infor Process Group's vertically-focused "assembler strategy" (also see Stability and Functionality for Process and Discrete Manufacturers). It is interesting to note that the Infor of today originated with the Infor Process Group; its very first acquisition was the 2002 Process Group spin-off from the former SCT Corporation, which brought Adage ERP and Fygir SCP process manufacturing products into the fold (see iProcess.sct Enters Golden Gate Opportunity). It is ironic, however, that this very functional and prosperous "mother" product portfolio has been left largely unattended by Infor for some time, owing to a spate of other acquisitions, especially within the now much larger discrete manufacturing and wholesale distribution groups.

This is Part Four of the six-part series The Enterprise Applications "Arms Race" To Be Number Three.

But any "injustice" in this regard has seemingly been rectified. For one thing, in late 2004, Infor acquired IncoDev Software-Entwicklung GmbH, headquartered in Hamburg (Germany). Over the past twenty-five years, this company has provided ERP software to large and midsized European companies within the chemical, dyes and paints, life sciences, and food and beverage industries. Their software has deep a vertical focus, supporting most requirements of the lot- and recipe-oriented manufacturing industry, which, combined with its broad customer and partner base throughout Europe, was an important factor in strengthening Infor's position within process industries.

The combination of IncoDev's ERP capabilities with Infor's existing supply chain planning (SCP) offerings, international presence, and financial strength, provided additional benefits to its customers while increasing the vendor's competitive advantage. IncoDev's ERP solution, rebranded into Infor Blending, now supports many aspects of financial management, production planning, and inventory management for specific process industries, and is certified for the pharmaceutical industry. The solution also includes integrated quality management, a laboratory information management system (LIMS), and hazardous materials management. The product serves over 200 large and midsized customers, and has more than 10,000 users; this is a result of being marketed directly (in a big way) in Germany, and through a dedicated network of solution partners throughout western Europe.

Consequently, the Infor Process Group now boasts over 120 employees (with over 80 percent of employees in the research and development [R&D], support, and professional services departments) and over 400 customers (of which 150 are specialty chemical enterprises, 50 are pharmaceuticals, and 200 are food and beverage companies). The group has estimated annual revenues of about $36 million (USD), with license revenue amounting to 27 percent (with an equitable split between the support and maintenance revenues). Europe contributes 53 percent of revenues, and North America contributes the remaining 47 percent.

This continuation of a series comparing SSA Global and Infor Process Group, two contenders in the fierce ongoing competition to be number three (after SAP and Oracle) in the world of ERP vendors, analyzes Infor's acquisition of Adage ERP and Fygir SCP from the former SCT Corporation, and of Datastream Systems. Later articles will discuss Infor's acquisition of Formation Systems and Geac.

See The Enterprise Applications "Arms Race" To Be Number Three for background information and a discussion of vendor similarities. For more information, see Contributing to the Rejuvenation of Legacy Systems in the Enterprise Resource Planning Field. Also see New Vendor Acquisition Strategies in the Enterprise Applications Field for a comparable analysis of SSA Global. The other leading contender is Lawson Software. For a detailed discussion of Lawson, see New' Lawson Software's Transatlantic Extended Enterprise Resource Planning Intentions).

In combination, the two ERP products, Infor Adage and Infor Blending, feature support for the resolution of many process manufacturing "fatal flaws" (see The Fatal Flaws for Process Manufacturers, Fatal Flaws in ERP Software Create Opportunity for Niche Software in CPG Companies, and Process Manufacturing Software: A Primer). Some key differentiators worth mentioning include support for variable weight or "catch weight"; lot traceability to help food processors trace any portion of each batch or lot (for purposes of damage control, the US Department of Agriculture [USDA] requires food processors to be able to trace any portion or product of, for example, a processed chicken); quality management; variable weight-based costing and pricing throughout the supply chain; regulatory compliance; and a comprehensive supply chain management (SCM) solution for process industries.

Challenges

The vendor does acknowledge some technological and functional shortcomings, especially with respect to the Adage product, which still lacks a proper graphical user interface (GUI). Also, Adage often needs to interface with strong financial management products (such as SAP or PeopleSoft solutions), and lacks US Food and Drug Administration (FDA) regulatory compliance for pharmaceutical companies. For that reason, a helpful target division of products would involve using Adage for larger companies in the food and beverage, and chemical sectors, and Blending for smaller companies in the pharmaceutical and consumer products sectors.

In the short term, which means by the end of 2006 (or even earlier), the products are slated for user interface (UI) enhancements (in terms of browser deployment and improved usability for Infor Adage 5.0), and for integration with Infor WMS (i.e., VISUAL WMS) and Infor Global Financials (for the Infor Blending 5.9 release only)—the latter stemming from Varial. The idea is to migrate the Adage 6.0 and Blending 6.0 releases in 2007 to the adopted Infor client (within Corestone) and to integrate them into Infor Global Financials. Also, both products are to be migrated to n-tier architecture, with complete encapsulation of business logic in a manner enabled by service-oriented architecture (SOA). All these short-term and midterm functional enhancements have been driven by user groups, regulatory compliance, and industry trends.

The long-term roadmap, for 2008 and later (and for both product releases 7.0 and later), is to eventually converge the products into an Infor Process ERP product (in a way that is somewhat similar to SSA Global's current forays), using Corestone architecture components, with core process industries applications such as process manufacturing, order management, and costing. By then, the product will also be integrated with Infor Global Financials, Infor WMS, Infor CRM (coming from SyteLine), and Infor SCM.

Datastream Acquisition

Related to the process group, which has many asset-intensive customers (although the Infor Distribution Group may also have many customers with interests in fleet tracking and management), is the acquisition of Datastream Systems in early 2006. The merging parties are working to close this transaction as soon as reasonably possible, and it is expected to be completed in the second calendar quarter of 2006. Datastream, founded in 1986, provides asset performance management software and services to more than 6,700 enterprises (in more than 140 countries), including more than 60 percent of the Fortune 500. Its solutions combine enterprise asset management (EAM) functionality with advanced analytics, to deliver a platform for optimizing enterprise asset performance.

The flagship product, Datastream 7i, delivers an asset performance management infrastructure combining an advanced SOA (which is in tune with the upcoming Infor Corestone platform), with broad enterprise asset management (EAM) functionality, integrated procurement, analytics, and multi-site capability. By using these solutions, customers in sectors such as manufacturing, hospitality, health care, transportation, telecom, facilities management, and government can maintain and manage capital assets. These assets might include manufacturing equipment, vehicle fleets (including mobile assets like forklifts or automated guided vehicles [AGV]), and buildings. These solutions also allow customers to create analyses and forecasts so that they can take action to improve future performance. The Web-based product, which is strong in capabilities such as asset tracking; work order management; scheduling; preventive maintenance; parts inventory; and maintenance, repair, and overhaul (MRO) procurement capabilities, allows users to view maintenance activities across multiple plants. There is also a separate e-procurement package (Datastream 7i Buy), which is integrated with Datastream 7i to provide automatic requisitioning of parts as reserved by maintenance orders, with access to the catalogs of hundreds of MRO suppliers, along with support for internal catalogs.

Furthermore, a calibration module manages tools and equipment, and an e-records and e-signature module enables record keeping for compliance with such regulations as the well-known US Food and Drug Administration Code of Federal Regulations (FDA CFR) Title 21 Part 11. The analytics module provides calculation, contextualization, correlation, connectivity, and visualization tools, for a better understanding of the trends and root causes of equipment performance and reliability (thus enabling visibility and better decision making by pushing data to dashboards, palmtop computers, web-browsers, and pagers). These EAM and manufacturing intelligence capabilities (see Plant Intelligence as Glue for Dispersed Data?), while not yet being at the level of SAP, especially following SAP's recent acquisition of Lighthammer (see Has SAP Nailed Plant Level Leadership with Lighthammer?), certainly raise the bar for Infor in comparison to the capabilities of SSA Global, Intentia, IFS, Oracle, IBS, Ross Systems/CDC Software, Epicor Software, QAD, Glovia, and so on.

Datastream Benefits

Datastream's asset performance management strategy delivers value to customers by connecting critical maintenance and asset information with operational data, in order to improve organizational performance; maintenance can be subsumed under overall corporate strategy, and resources can thus be focused more accurately to enhance opportunity, and reduce risk and cost. With the advent of best practices such as reliability-driven maintenance (RDM) (see Reliability Driven Maintenance—Closing the CMMS 'Value Gap'?), employee safety, and total productive maintenance (TPM), the asset maintenance function has been receiving increasing attention lately within enterprises, and has been elevated above the role of an expense department. However, as long as maintenance remains within the realm of separate enterprise asset management/ computerized maintenance management system (EAM/CMMS) software, management will be missing some mission-critical parts of the "big picture" its enterprise application system aims to present. While CMMS and EAM have optimized inventory levels across plants and improved throughput at lower production costs by reducing equipment downtime and performing preventive maintenance, only an integrated EAM or ERP platform permits a complete view of the entire organization's key metrics for a comprehensive performance perspective (including not only planning, manufacturing, sales, procurement, inventory, finance, and human resources, but also maintenance performance metrics and opportunities for improvement).

With such an integrated platform and inherent information sharing, asset-intensive user organizations should reap tangible benefits:

  • Greater purchasing power and better spending control
    In theory, integration of ERP with EAM allows better control over purchasing processes (negotiation, decision-making, electronic ordering, spending control), and helps standardize and minimize spare parts inventories.

  • Production efficiencies
    An integrated system should make it easier to view production schedules to determine the best time to take an asset off line (for example, for preventive maintenance).

  • Analysis of equipment failure
    An integrated system should provide consideration of equipment downtime in the analysis of supply chain efficiency, and its impact on quality and order fulfillment; following a repair, ramp-up costs can thus be more easily analyzed.

For more information on potential benefits, see EAM Versus CMMS: What's Right for Your Company?.

Given the asset-intensive nature of Infor's customer base and target markets, Datastream's EAM solutions will address a key business need. The combined company will have 24,700 customers in 140 countries (the two companies already have 1,000 common customers). Datastream has more than 6,700 customers on support (for example, Boeing, ChevronTexaco, Pfizer, and GlaxoSmithKline) and a dedicated employee base which should expand Infor's expertise in the manufacturing and distribution sectors, as well as other asset-intensive industries. Datastream's technological leadership in developing Web-architected solutions should also complement Infor's own commitment to assembling cost-effective solutions tailored to customers' specific operating environments. Conversely, Infor's financial backing, global reach, and additional product solutions may provide Datastream customers with a path for continuous operational improvement and long-term growth.

In the short term, it is thus logical to expect Datastream to remain as an autonomous division and to be sold as a best-of-breed application. However, eventually it will be "cross-sold" globally as a superbreed product by the Infor sales force, and will be more fully integrated into the Infor solution suite. However, one challenge will be Datastream's lack of current support for the IBM iSeries platform, which is well-represented amongst Infor ERP products. For this reason, the recent predatory (and highly visible) moves on the install base by EAM competitors MRO Software and DPSI should not surprise anyone, especially given some users' concerns about the future of Datastream's midmarket MP2 product.

 
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